Cable Resources

Comcast, Verizon say no thanks to Lehigh Valley expansion

Feb 04, 2013 (The Morning Call (Allentown - McClatchy-Tribune Information Services via COMTEX) --
In a world of seemingly bountiful Internet and television service options, Kevin Spear finds himself in an unenviable high-tech no man's land.

Spear, 43, has few complaints about the Internet access he receives through Service Electric at his Lower Macungie Township home, but he's not crazy about the cost. He wouldn't mind having the leverage of some competition to lower his monthly bill.

"FiOS would be great," said Spear, who receives television service from a satellite provider.

Spear and others in the Lehigh Valley seeking that kind of variety may be out of luck.

Verizon says it has no intention of expanding its FiOS product to the Lehigh Valley beyond the Allentown area it moved into four years ago. Comcast, another Internet-cable-phone service giant, says it isn't planning to enter territories in Lehigh and Northampton counties dominated by Service Electric and RCN.

Verizon spokesman Lee Gierczynski said last week that his company's focus is on meeting its obligations with 341 municipalities in Pennsylvania where it already has agreements to offer its services and that no other geographic areas are on its radar. He said the company's "build out obligations" in those towns run through 2016.

"We currently don't have any plans to expand it beyond where it is," Gierczynski said of FiOS, which is Verizon's high-speed, fiber-optic service. "It's hard to speculate on what we might do in the future. Right now we're focusing on buildouts and increasing our market share in those communities [where FiOS already is offered]."
Verizon's freeze on FiOS expansion in the Lehigh Valley isn't unique. A top-ranking Verizon official told investors last year that it wasn't expanding beyond its current franchise obligations. FiOS is currently available in 12 Mid-Atlantic states and Washington, D.C., Gierczynski said. The company invested $23 billion into the fiber-optic network.

Jeff Kagan, an industry analyst, called the FiOS trend "very confusing."
"I don't understand why Verizon was so actively pushing FiOS in the beginning and seem to have slowed down" he said. "I've asked them [why]. They haven't told me.

Still, Kagan said, "It costs money [to expand]. There has to be enough customers and income to make it worthwhile."
Comcast, which offers its services under the Xfinity brand and has a large customer base in southeastern Pennsylvania, has no customer base in the two-county Lehigh Valley area and has no intention of entering that territory, spokesman Jeff Alexander said in an emailed response to questions.

When asked the particular reason for that and whether Comcast would consider moving into the area in the future, Alexandar replied, "I'll just leave it as we currently have no plans."
Officials in Lower Macungie, the third-most populated municipality in the Lehigh Valley, have received phone calls and emails from residents requesting Verizon and Comcast services.

Township Manager Bruce Fosselman said it's not as if the township doesn't want them to come into the 23-square-mile township, which expects to generate $420,000 in franchise fees this year from RCN and Service Electric. Each company pays a 5 percent fee on its gross receipts in the township.

Lee Lichtenwalner, the township's special projects director, explained the situation recently in a response to one resident asking about FiOS.

"The cable companies are often reluctant to enter territories already served by a competitor due to the cost of installation of a network where they may not acquire enough customers," Lichtenwalner wrote. "But that is their decision."
Lichtenwalner added, "Lower Macungie Township will gladly work with any and all TV service providers."
RCN spokeswoman Joanne Guerriero said her company, like Verizon and Comcast, is not looking to extend its boundaries.

She said there's a "large capital investment" to move into a new area and if there are other competitors in town "there's only a finite number of households."
"It becomes a process that most companies go through," she said. "Who is already doing business there and does it make financial sense to make the investment It's a return on investment equation."
Dan Reavy, director of external affairs for Verizon Pennsylvania, said that aside from the company's push into Allentown in 2009, the company never had plans to move into other parts of the Lehigh Valley.

Verizon officials said as much in a Morning Call story published in 2009. They said the company chose Allentown because of its infrastructure and DSL service lines.

Verizon wouldn't say how many customers it has in Allentown. City spokesman Mike Moore said FiOS was brought in after the city reached out to Verizon about its interest in serving Allentown residents. The two sides eventually inked a 10-year contract that expires in 2019.

The city expects to generate a combined $1.1 million this year from agreements with Service Electric, RCN and Verizon.

Easton Mayor Sal Panto Jr. said in 2009 that Verizon expressed an interest in moving into his city, but that never materialized.

Meanwhile, there are a small number of people like Ira Lunsk who receive FiOS phone and Internet service but aren't able to get television added.

Reavy said there's a small part of Lower Macungie where Verizon offers FiOS for Internet and phone users, but he said television service can't be added because Verizon doesn't have the requisite franchise agreement needed to do that and has no plans of seeking one.

Lunsk had assumed that would be a matter of "flipping a switch."
He said there are occasions when his Service Electric audio goes out for four or five seconds at a time. Friends of his who have FiOS are very happy with it, he said.

Lunsk expressed disappointment last week when told that FiOS television service was unlikely.

Said Lunsk: "I guess I will start working on my wife to get satellite TV."
patrick.lester@mcall.com
610-820-6764
What: Verizon says it has no plans of expanding its FiOS product in the Lehigh Valley. Comcast similarly doesn't intend to move into Lehigh and Northampton counties.

Why: RCN and Service Electric already are entrenched in the two-county area. Competitors are reluctant to join them partly because of the upfront investment costs versus the potential customer base they could attract.

Where it is available: FiOS television, Internet and phone service is available in parts of Allentown. In the Kuhnsville area, FiOS Internet and phone service, but not television service, is available.

The future: Comcast and Verizon say they're focusing service only in areas where they already have agreements to provide it. They couldn't say whether that would change in years to come.